FM assures there will be no double taxation

Kathmandu, Aug. 17:

Finance Minister Dr. Yuba Raj Khatiwad Khatiwada has given assurances that there would be no double taxation in the federal system.

“The constitution has a clear provision of single taxation system. The common tax areas among the federal, provincial and local governments do not mean that each government can impose tax on those topics. The issues would be sorted out soon,” he said at a press conference organised at the Ministry of Finance (MoF) on Friday.

According to him, the government has been receiving compliant from the businessmen about the complexities of the double tax which has increased the cost of doing business because of additional time and money.

The government has recently formed a 3-member committee led by a joint-secretary at the MoF and includes private sector representative to find out the double taxation situation and recommend the solutions.

Regarding the exorbitant taxes imposed by some of the local bodies, Finance Minister said that many of such tax were reasonable as the rates were not reviewed for the last one and a half decades.

He said that the municipalities had to charge higher taxes on its citizens than the rural municipalities since the former has to manage resources for more, and sometimes advanced, infrastructure and other facilities.

“However, no government is allowed to impose tax beyond their jurisdiction. But, the local bodies should raise taxes at the reasonable rates to manage resources for the development works,” said Dr. Khatiwada.

He said that the concessional loan facilities for the families that lost their houses in the devastating 2015 Gorkha Earthquake would not be scrapped.

The MoF has directed the Nepal Rastra Bank for the continuity of the facility. As the central bank has the fund for such lending, quake-victims can claim for the subsidised loan from the banks and financial institutions (BFIs).

Post-quake reconstruction is on government priority, said Dr. Khatiwada

In May 2017, the government had announced to provide the loan of Rs. 300,000 to the quake-victims without any interest in group guarantee without any collateral.

The government has amended the provision with ‘against the collateral of their under-construction house’ in October last year.

The NRB would provide the funds to the BFIs without any interest and the banks would mobilise it at 2 per cent interest, to manage their operation costs.

The MoF said that there has been significant progress in terms of implementing the budget of this fiscal year 2018/19.

“Bills on contributory pension system, payment and clearance, insurance, and federal audit have been tabled at the Parliament while drafts of investment act, regulatory body for non-banking financial institutions and others have been prepared,” said Dr. Khatiwada.

In the first month of the current fiscal year, 9 additional local bodies have bank branches. Altogether 640 local units have at least a bank-branch.

The budget expenditure in the first month stands at Rs. 26 billion – Rs. 24.6 billion current and Rs. 1.4 capital expenditure.

Similarly, Rs. 6 billion and Rs. 10 billion have been sent to the provincial and local governments respectively as the conditional and fiscal equilisation grant.

Revenue Secretary Sishir Kumar Dhungana said that the revenue collection witnessed 137 per cent growth of the Rs. 63.64 billion in the first month of the current fiscal year.

Published in The Rising Nepal daily on 19 August 2018.